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Estimating the equilibrium real exchange rate and misalignment for Indonesia
The purpose of this thesis estimates the long run behavioral equilibrium real exchange rate (BEER) in Indonesia. The empirical analysis builds on quarterly data from 1990Q1 to 2008Q4. The econometric analysis found that all the variables stationary at first level of differencing. Accordingly, the paper proceeds by estimating VEC models. Regression results show that long-run equilibrium of the real exchange rate could be explained by real interest rate differential, ratio of tradable to nontradable price indices, terms of trade, and government expenditure. On the basis of these determinants, the equilibrium of real exchange rate is computed and the misalignment in Rp/USD rate is quantified. The key finding of this thesis is that the result from BEER different from PPP approach especially during period 2004 to 2008, the PPP indicates overvaluation whether BEER indicates undervaluation, this result may explain why Indonesia experience great export performance during 2004 to 2008. The thesis recommends that the real exchange rate misalignment should be corrected by implementing macroeconomic policy which may change the main determinant of real exchange rate (i.e. by adjusting the nominal exchange rate or relative price). However, the former term is not relevant since Indonesia has free floating exchange rate regime. Hence, adjusment process may be carried out only in relative price. Relative price would be competitive if inflation rate remain low. That is, to perform low inflationary economy, Indonesia should increase its productivity level.Ada tabel
Ketersediaan
| Call Number | Location | Available |
|---|---|---|
| 6715 | PSB lt.2 - Karya Akhir | 1 |
| Penerbit | Depok: Departemen Ilmu Ekonomi, Fakultas Ekonomi Universitas Indonesia 2009 |
|---|---|
| Edisi | - |
| Subjek | Exchange rate Monetary economics Behavioral equilibrium |
| ISBN/ISSN | - |
| Klasifikasi | - |
| Deskripsi Fisik | xi, 65 p. : diagr.; 30 cm & lamp |
| Info Detail Spesifik | - |
| Other Version/Related | Tidak tersedia versi lain |
| Lampiran Berkas | Tidak Ada Data |